BankTech

Understanding Remittances: Regulatory Aspects

MEDICI

An understanding of the legal and regulatory aspects of remittances is important. The existence of multiple channels and the institutional and legal environment governing remittances transactions pose numerous challenges to fund transfer operators. Furthermore, the regulatory environment and practices substantially vary across countries in the treatment of entities engaged in fund transfers and the various modes of transfer used, which has significant implications for the business. In order to simplify the above, we have come up with our ranking of key countries in Asia when it comes to regulations and the ease of setting up a remittance business. Full Harvey Balls indicates a country which is very open to nonbanks while an empty Harvey ball indicates those which are closed (where remittance is mostly a bank’s business).

Understanding Remittances

The Philippines: This country seems to be the best breeding ground for new remittance providers in Asia. Nonbanks can get an SVF/wallet license; they have to register themselves as a local company in the business of e-money. An SVF license also comes with a remittance license (no separate application is required). Minimum paid-up capital of P100 million is required to set up a remittance business. They allow nonbanks to perform international remittances through mobile wallets as well.

Malaysia: A nonbank can offer both remittances and mobile money services in Malaysia. The minimum paid-up capital for remittance licensing is 2 million ringgit. An entity having both e-money and a remittance license in Malaysia can offer international remittances through mobile wallets.

Indonesia: The remittance and e-money guidelines in Indonesia are quite comprehensive and open. Nonbanks can get into the business of remittances. Nonbanks have to register themselves as a local company. Minimum paid-up capital to set up a firm is five hundred million (500 million) Indonesian rupiahs. They allow remittances through mobile wallets as well (international).

India: Nonbanks in India can offer remittance services under the MTSS scheme. Both the overseas principal and their Indian disbursement agents need to seek prior approval. Nonbanks can also launch mobile wallets in India. However, nonbanks are not allowed to perform international remittances through mobile sans a banking partner.

UAE: Nonbanks can apply for a remittance license in the UAE. The paid-up capital for a remittance license should be AED 50,000,000 (dirhams 50 million) if the applicant is a limited liability company. The country allows only banks to launch e-money services in the country.

KSA (Kingdom of Saudi Arabia): Nonbanks can apply for a remittance license in Saudi Arabia. The paid-up capital for a remittance license should be Rls. 2 million (the capital shall be increased by Rls. 0.5 million for an additional branch). The country allows only banks to launch e-money services in the country.

South Korea: Nonbanks in South Korea can offer e-money services with a licensing. However, remittance is a bank-driven model; nonbanks cannot acquire a remittance license. The capital requirement for e-money services is two billion won.

China: Remittance in China is bank-driven. Nonbanks can only act as overseas principals and have to partner with banks for remittance disbursement. However, nonbanks can acquire an e-money license involving in P2P transfers through mobile. For a countrywide license, a payment institution shall have a minimum of 100 million yuan as registered capital; while for a provincial license (autonomous region or municipality), an institution shall have a minimum of 30 million yuan as registered capital.

Vietnam: Only banks are allowed to participate in international remittances. However, nonbanks can launch e-money services in the country for which they will have to register themselves as a local company. However, cash-in/cash-outs of the wallet are allowed only when nonbanks partner with a bank. International remittances through nonbank mobile wallets are not allowed.

Thailand: Only banks, state entities and the postal department are allowed to participate in international remittances. Nonbanks can get an SVF/Mobile wallet license for domestic P2P remittances. However, they will have to register themselves as a local company in the business of e-money.

Bangladesh: The country does not entertain nonbanks to participate in international remittances or mobile money. Nonbanks can only partner with a bank to be their extended arm in disbursement. Only banks can select network agents. No licensing is required for being an agent in Bangladesh for a bank.

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MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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